China Joins Third World in WTO Reform Debate

· China's WTO intervention: At a WTO discussion on Level Playing Field (LPF) issues, China argued that "unilateralism and fragmentation cannot be the solution" to global trade challenges, without directly naming the United States or G7 members.

· Call for multilateral governance: China maintained that challenges relating to a level playing field should be addressed through improved global trade governance under the WTO framework.

· Context of WTO reform divide: China's remarks come amid continuing differences between:

o Developing and least-developed countries (LDCs), and

o Major WTO reform proponents, including the United States, European Union, Japan, and the Friends of the System group.

· Balancing domestic policies and trade rules: Deputy Trade Envoy Li Yihong stated that level playing field issues often lie at the intersection of legitimate domestic policy objectives and international trade obligations.

· Reference to reform proposal: China noted that members had made progress in discussions since it submitted its WTO reform proposal (WT/GC/W/989) in February and that it had carefully considered other members' views.

· WTO already provides the foundation: China argued that the WTO's existing principles—including:

o Non-discrimination,

o Transparency, and

o A binding dispute settlement system,

already provide the institutional basis for promoting a level playing field.

· Defence of core WTO principles: China stressed that WTO reform should strengthen rather than weaken the multilateral trading system and should preserve core principles, particularly the Most-Favoured-Nation (MFN) principle.

· Warning against power-based trade: China cautioned that weakening WTO principles could replace a rules-based trading system with a power-based system, benefiting only a few countries.

· Support for meaningful reforms: Beijing said it supports reforms that genuinely address trade distortions while preserving the integrity of the multilateral trading system.

· Different interpretations acknowledged: China recognised that WTO members may have different understandings of what constitutes a "level playing field", but said these differences should be resolved through:

o Constructive dialogue,

o Mutual understanding,

o Policy coordination.

· Criticism of unilateral measures: China argued that differences over LPF are increasingly being used to justify:

o Unilateral and discriminatory trade measures,

o Exclusionary trade arrangements,

o Competitive subsidy races,

which disproportionately harm developing countries.

· Multilateral engagement emphasised: China maintained that only multilateral cooperation can provide legitimacy, inclusiveness, predictability, and balanced solutions to level playing field concerns.

China's Three Proposals

1. Focus Governance on Trade-Distorting Government Measures

· WTO reform should primarily address government measures that distort international trade, including industrial subsidies.

· China acknowledged that subsidies can:

o Correct market failures.

o Promote industrialisation.

o Reduce development gaps.

o Support global public policy objectives.

· However, poorly designed subsidies can:

o Distort trade.

o Disrupt supply chains.

o Waste public resources.

· China argued that reforms should limit harmful effects without eliminating legitimate policy tools.

· It opposed treating state-owned enterprises (SOEs) as inherently trade-distorting or promoting privatisation as the only acceptable solution.

· China also insisted that developing countries should retain adequate policy space for industrialisation and sustainable development.

2. Adopt a Balanced Governance Framework

· China argued that no single approach can ensure a level playing field in today's integrated global economy.

· It proposed a comprehensive toolkit comprising:

o Updated subsidy disciplines.

o Greater transparency.

o Stronger oversight.

o Enhanced policy dialogue.

· China advocated preventive governance, arguing that preventing trade distortions is preferable to addressing them after they occur.

· It also warned that the misuse of trade remedies has itself become a source of trade distortion and called for safeguards against abuse.

3. Keep Discussions Open, Inclusive and Member-Driven

· China stated that LPF discussions should not be shaped by:

o One-sided narratives.

o Market share comparisons.

o Trade balance statistics.

o Predetermined outcomes.

· Discussions should instead focus on:

o Practical governance challenges.

o Concrete policy measures.

o Building trust and consensus among WTO members.

· China opposed using:

o External datasets,

o Independent studies,

o Country-specific practices or commitments

as benchmarks for WTO negotiations.

· Beijing indicated that it would continue participating constructively and may submit additional proposals as discussions evolve.

Next Steps

· A planned WTO transparency session on 30 August has been cancelled as facilitators and the Secretariat continue addressing substantive differences on four major reform issues.

· Facilitators are expected to issue reports on the discussions, but concerns remain among members regarding the need for balanced and impartial summaries that accurately reflect all negotiating positions.

[ABS News Service/01.08.2026]

Without directly naming the United States or other members of the Group of Seven industrialized countries, China used a World Trade Organization discussion on level-playing field issues this week to assert that “unilateralism and fragmentation cannot be the solution”.

“The challenges relating to a level playing field are best address(ed) through improved global

trade governance," China maintained.

The remarks come amid a persistent rift between a large majority of developing and least-developed countries on one side, and the key proponents of WTO reform – the United States, the European Union, Japan and the Friends of the System group – on the other.

In that divided context, China’s Deputy Trade Envoy to the WTO, Li Yihong, informed members that “the issues [referring to LPF issues]at stake often lie at the intersection of legitimate domestic policy objectives and international trade obligations.”

China’s statement highlighted several core challenges in the LPF debate. China noted that since circulating its last reform proposal (WT/GC/W/989) in February, “discussions among Members have progressed, and we have carefully considered the perspectives put forward by other Members in their submissions.”

According to Beijing, “the WTO already provides the essential institutional foundation for promoting a level playing field, including through non-discrimination, transparency and the binding dispute settlement system.”

Reaffirming its position on “the Foundational Issues track,” China stressed that “the objectives of WTO reform, including the pursuit of a level playing field, cannot be achieved by weakening the WTO or eroding its core principles, including the most-favoured-nation principle.”

“On the contrary,” China cautioned, “doing so would risk replacing a rules-based system with a power-based one, where the playing field is shaped by the few rather than level for all.”

Therefore, China argued it “supports strengthening the WTO through the necessary reforms to address the genuine challenges to achieving a level playing field.”

While acknowledging that “Members may hold different understandings of what constitutes a ‘level playing field,’” China noted that such differences “should be addressed through constructive dialogue, mutual understanding, and policy coordination.”

However, Beijing warned that “in practice, such differences are increasingly being invoked to justify unilateral and discriminatory measures, exclusionary trade arrangements, and competitive subsidy races, all of which have become among the greatest threats to a level playing field and disproportionately harm the legitimate interests of developing Members.”

The senior Chinese official firmly maintained that “only multilateral engagement and cooperation can provide the legitimacy, inclusiveness, predictability, and broad acceptance required for balanced and durable solutions, and enable Members to draw on a broader range of policy tools.”

Three Proposals

To advance the LPF discussions, China put forward three concrete elements for members’ consideration:

1. Identifying the Appropriate Object of Governance: China argued that “the focus should be on government measures that may distort international trade, including industrial subsidies.” While such measures, “when well-designed and implemented, can address market failures, narrow development gaps, promote industrialization, and contribute to tackling global challenges,” they can also “distort trade, disrupt supply chains and waste public resources” when misused. Thus, “WTO reform should therefore aim at containing their negative effects without compromising their benefits by recognizing their double-edged nature.” Crucially, China insisted that reform “must not infringe upon Members' sovereign right to establish and maintain state-owned enterprises by characterizing their existence as inherently trade-distorting government intervention and prescribing privatization as the sole solution,” nor should it “constrain the legitimate policy space that developing Members require for industrialization and sustainable development.”

2. Steering Toward a More Effective Governance Approach: China cautioned that “in today's deeply integrated global economy, there is no simple or one-size-fits-all solution for promoting the level playing field.” It stressed that “effective governance therefore requires a comprehensive and balanced toolkit,” including updating subsidy rules, improving transparency, strengthening oversight, and promoting dialogue. Beijing further stated it “firmly believes that when it comes to trade distortions, prevention is better than remediation,” urging members to focus on upstream policy design. It also warned that “the misuse of trade remedies has itself become a source of concern,” and that “extra caution should therefore be exercised, and effective safeguards against abuse should accompany their use as governance tools.” 3. Keeping Discussions Open, Inclusive, and Member-Driven: China insisted that the LPF track “cannot be defined through one-sided narratives, nor measured simply by market shares or trade balances.” It stressed that “discussions should neither be selective nor driven by predetermined outcomes,” but instead “seek to build mutual understanding, trust, and convergence among Members.” To achieve meaningful progress, China said: “discussions should remain focused on concrete measures and practical governance challenges rather than politically constructed labels or vague concepts.” Furthermore, Beijing insisted that “external datasets, studies, outcomes or Member-specific practices and commitments should not serve as benchmarks or reference points for our discussions.” China concluded by stating it “attaches great importance to the work of [this] track and looks forward to continuing to engage constructively in discussions,” while reserving “the right to submit further communications to elaborate its views as discussions progress.” Meanwhile, a transparency session scheduled for August 30 has been cancelled, as facilitators and the Secretariat grapple with the substantive discussions on four key issues. Although facilitators have promised to issue reports on their meetings, they are under scrutiny to ensure those reports are balanced and accurately reflect all positions without bias – a challenge that has plagued previous summaries, according to people familiar with the developments.